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Dissipation vs. hiding marital assets

On Behalf of | Jun 24, 2023 | Property Division

In divorce, financial conflicts are common. Individuals generally want to save as many of their assets for themselves as they can. There may also be a level of animosity. For instance, a person who is getting divorced because their spouse engaged in an affair may be more likely to try to take financial advantage of the situation.

Two of the main ways that people aim to tilt property division scenarios in their favor involve dissipating marital assets and hiding assets. These approaches can accomplish similar goals – and are similarly wrongful in the eyes of the courts – but they are carried out very differently.

Hiding assets

When someone hides assets, it means they’re trying to keep them from being considered in negotiations or litigation. For example, maybe a business owner has transferred funds into an offshore account. Or, perhaps an individual gave the contents of a bank account to a friend, with the understanding that their friend would give that money back after the divorce. It is illegal to hide assets. Both spouses are required to give a full disclosure of everything that they own so that the court can help them work through property division in the event of a contested divorce. But it does still happen, which is why it’s important to look for red flags or other warning signs that a spouse may be trying to keep assets hidden.

Dissipating assets

Dissipating assets is also a tactic used to keep the other spouse from getting assets during divorce, but it relies on spending rather than hiding. Oftentimes, this occurs when one person knows that they have the potential to earn a lot of money or they have a very reliable income. Maybe they are a business owner who makes millions of dollars a year, while their spouse is a teacher who hasn’t worked in the last few years. The person who earns more will spend the money on vacations, buying gifts for friends, paying for food and entertainment and things of that nature. They are just trying to spend the money quickly so that they don’t have to divide it with their ex, and they assume that they can then earn back whatever they spend after the fact. This approach is also potentially consequential in that the court may come down very hard on anyone who tries to spend their ex out of a rightful share of marital assets.

These are just two examples of how divorce can get financially complicated. Seeking legal guidance can help individuals to better ensure that their interests remain protected throughout this process.